Housing construction surged in January  — 
Fastest pace in 30 years reported, defying forecast of slowdown

Builders began construction on new houses at the highest rate in almost 33 years in January as record warm temperatures allowed builders to keep breaking ground, Bloomberg News reported.

Last month's starts were up 15 percent from December to an annualized rate of 2.276 million new homes. Housing starts rose 24 percent in the Midwest, corresponding to an annual rate of 371,000. Building permits unexpectedly rose 6.8 percent, indicating future construction growth. Though new home sales may drop this year, economists expect new housing starts will continue to rise as builders work off a backlog in orders from 2005.

"While housing demand will probably continue to moderate from the torrid pace seen in the last few years, housing starts should remain well-supported in the coming months, as builders' backlogs remain near record levels and rebuilding along the Gulf Coast will eventually boost activity," said Stephen Stanley, chief economist at RBS Greenwich Capital in Greenwich, Conn.

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